Proceedings of 13th Asian Business Research Conference

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Proceedings of 13th Asian Business Research Conference

26 - 27 December, 2015, BIAM Foundation, Dhaka, Bangladesh, ISBN: 978-1-922069-93-1

Energy Consumption, Economic Growth & Environmental

Quality: A Causal Relationship Revisited for the Bangladesh

Economy

Sakib B. Amin, A. M. Muhib Morshed and Aroni K. Porna

Economic growth is one of the key macroeconomic goals that every economy aims to achieve and Bangladesh is not an exception. Environmentalists stress the importance of environmental policies and point out that environment should not be ignored while the economy is in the process of pursuing economic growth. Amin et al. (2011) reveal that energy consumption leads to economic growth and no causal relationship exists between economic growth and CO2 emissions in Bangladesh, which implies that economic growth can be achieved without deteriorating the environmental quality. The objective of the present study is to expand the previous study for robustness check, by considering two more environmental indicators and an extended time period of 1972-2011 and hence, address the following question:

Can a sustainable economic growth persist without degrading the environment?

We consider a multivariate model and perform the Augmented Dickey Fuller (ADF) and

Phillips Perron (PP) tests to check if the variables are stationary. Next, we apply the

Johansen cointegration method followed by the Granger causality test to check for robustness. Our results confirm that Bangladesh cannot achieve economic growth without hindering the environmental quality. This also points out that considering only one environmental indicator might lead to a misleading conclusion regarding the economic growth and environmental quality nexus.

Field of Research:

Economics

__________________________________________________

Dr. Sakib B. Amin, Assistant Professor & Corresponding Author, Department of Economics, North South

University, Email: [email protected]

Mr. A M Muhib Morshed, Lecturer, Department of Economics, North South University,

Email: [email protected]

,

Ms. Aroni K. Porna, Lecturer, Department of Economics, North South University,

Email: [email protected]

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